Tuesday, September 10, 2013

Wall Street climbs, lifted by China data, waning Syria fears

By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stocks advanced at the open on Tuesday, putting the S&P 500 on pace for a sixth day of gains, following further upbeat economic data from China and as an alternative solution emerged to a possible Western military strike against Syria.
Fears of action against Syria eased after U.S. President Barack Obama said Monday he saw a possible breakthrough in the crisis with Syria after Russia proposed that its ally Damascus hands over its chemical weapons for destruction, which could avert planned U.S. military strikes.
Syrian Prime Minister Wael al-Halki said his country supported a Russian proposal for Damascus to give up chemical weapons to avoid a possible U.S. military strike.
"Certainly there was the potential for escalation, which was the market's primary concern, and that seemed to be the issue out there," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
Economic data in China showed stronger-than-expected industrial output and retail sales showed their fastest growth this year, reinforcing signs that the world's second-largest economy was stabilizing after slowing for more than two years.
"Another good China-data day and that has certainly been helping," Ghriskey said.
However, White House spokesman Jay Carney said Obama would press ahead with his plan to ask Congress to approve the use of military force in Syria, despite Syria's recent acceptance of the Russian proposal.
Oil prices pulled back, with U.S. crude off 2.3 percent. Crude prices rose 2.7 percent last week on worries a strike against Syria could spark a wider conflict and heightened supply concerns. The S&P energy index was off 0.6 percent, the only one of the 10 major S&P sectors in the red.
After suffering its worst monthly performance since May 2012 in August, the S&P 500 has rallied for a 2.9 percent gain to start the month, its longest winning streak since early July.
The Dow Jones industrial average rose 75.87 points or 0.5 percent, to 15,138.99, the S&P 500 gained 7.86 points or 0.47 percent, to 1,679.57 and the Nasdaq Composite added 16.016 points or 0.43 percent, to 3,722.199.
S&P Dow Jones Indices said Goldman Sachs Group Inc (GS.N) will replace Bank of American Corp (BAC.N), Visa Inc (V.N) will replace Hewlett-Packard Co (HPQ.N) and Nike Inc (NKE.N) will replace Alcoa Inc (AA.N) in the Dow Jones Industrial Average after the close of trading September 20.
Goldman shares rose 3 percent to $164.35, Visa gained 2.5 percent to $183 and Nike advanced 2 percent to $66.71, while Alcoa lost 0.1 percent to $8.07, Bank of America added 0.4 percent to $14.54 and Hewlett-Packard shed 1.5 percent to
McDonald's Corp (MCD.N) gained 0.7 percent to $97.08 after the fast-food restaurant chain reported a better-than-expected 1.9 percent increase in global sales at established restaurants in August.
Apple Inc (AAPL.O) is expected to introduce a cheaper version of the iPhone on Tuesday, bringing one of the industry's costliest smartphones within reach of the masses in poorer emerging markets. Apple shares were down 0.6 percent at $503.11.
(Editing by Bernadette Baum)

What to Expect When You’re Expecting: Apple iPhone Upgrade Edition

Shares of Apple (AAPL) remain well off their all-time peak of $705.07 but they’ve been on a tear of late, up 28% since the beginning of July, fed by numerous leaks and rumors about the company’s next iPhone.
Today, at 1 p.m. Eastern time, investors get to see just how close the leaks came to reality. Last year's iPhone 5 unveiling helped drive Apple to that peak price. Will this year's upgrades do the same?
Galaxy gear watch
The most exciting development from an investor’s point of view has been the possibility that Apple will release a lower-priced phone, dubbed the iPhone 5C by the rumor mill, to better compete in the fastest-growing segment of the market without hurting profit margins.
The iPhone, Apple's biggest-selling product by far, remains healthy and profitable thanks to strong sales in wealthy countries such as the United States. But the phone has been outpaced by cheaper models from Samsung, ZTE and others in less-developed markets such as China and India. Investors worry that Apple is missing out on this high-growth opportunity and could become vulnerable as cheaper devices catch up to the iPhone and threaten its premium pricing, even in wealthy countries.
What follows is a quick rundown of the major rumors and how confirmation from Apple might impact investor views of the stock. Keep in mind that predicting Apple’s share price is no easy game and, even if investors’ wildest dreams come true, the stock could fall on the common “buy the rumor, sell the news” phenomenon.
The iPhone 5C
Investors are most excited about the lower-priced iPhone, which could aid Apple in its battle against cheap phones running Google (GOOG) Android software. However, Wall Street analysts have been steadily increasing their expected retail price for the lower-priced device, which is rumored to come in a plastic case with a variety of colors to choose from. Once predicting a $299 to $350 phone, most analysts now expect a device at closer to $399 or even $450 – the same price at which Apple sells its two-year-old iPhone 4 now.
A not-so-cheap iPhone might sell better than the iPhone 4 and could have higher profit margins for Apple. In markets such as the U.S., where carriers subsidize the price of the phone, that could mean a “free” phone for consumers.
Galaxy gear watch
In less-wealthy markets, Apple could also discount the price, offer monthly installment payment plans and take trade-ins to boost sales, all tactics it's been using to sell the iPhone 4 in India this year.
If the 5C is priced too cheap, however, investors may worry about cannibalization of higher-end sales.
That appears to be what happened when Apple introduced the lower-priced iPad mini last year. The company’s profits have shrunk this year as more customers bought lower-end models with lower profit margins.
China Mobile
Speaking of China, Apple’s iPhone is not currently offered by China Mobile, the world’s largest mobile carrier. In part, that’s because China Mobile uses an odd cellular standard that Apple has not included in the iPhone. That could be about to change, particularly with the 5C model.
Fueling the rumors, Apple has said, in addition to its normal iPhone announcement event in California, it plans to hold a separate event in Beijing (it’s also holding events in Berlin and Tokyo).
Wall Street analysts are salivating at the prospect of a China Mobile deal and predicting such a move could boost total iPhone sales by 10% a year or more.
Apple has been testing a trade-in program that could also help to goose iPhone sales and encourage customers to upgrade more frequently. Under the program, which Apple has confirmed, a customer brings an old iPhone into a U.S. Apple store and gets immediate credit against the purchase of a new phone on a two-year contract.
The credit isn’t necessarily as good a deal as the money paid by existing trade-in services such as Gazelle but it is simple and convenient. Apple’s trade-in credit is also likely considerably less than a customer could get by selling the phone on eBay.
But Wall Street loves the idea of shortening the upgrade cycle.
The iPhone 5S
How about the new flagship model? It will likely be the same look on the outside but with faster internal components. And a gold model is expected to join the line of black and white phones. That’s boring to many bloggers and Android fans but still likely enough to sell tens of millions of units in the opening months.
The new iPhone is expected to add a fingerprint reader for enhanced security. That’s a ho-hum feature for investors unless and until Apple ties the reader to a new mobile payments platform.
Google, credit card companies and others have been trying to create mobile wallet plans that let customers use their phones to make small payments for coffee or magazines, but none have caught on yet. The opportunity is vast and Apple’s huge customer base of almost 600 million iTunes users could give the company a tremendous head start. Apple has been highlighting that its upcoming software for iPhones will include a new wireless standard, known as Bluetooth low energy, that could be part of a mobile payments platform. Any move to create such a program would absolutely thrill Wall Street. But the related rumors remain vague.
iOS 7
The new iPhones will also be sporting Apple’s upgraded operating system software, iOS 7. The software has a different look and feel than prior versions, featuring bright colors and a simpler and less ornamented design.
The software also includes features that could impact other stocks. A new iTunes radio app poses a challenge for leading Internet radio company Pandora Media (P). And the inclusion of direct photo uploads to Flickr (owned by Yahoo) could impact Facebook’s (FB) Instagram service. Added search capabilities via the voice-controlled Siri feature could cut into Google’s mobile ad revenue.
Last year’s iPhone introduction, on September 12, 2012, helped push Apple’s stock price as high as it's ever been – the famed peak less than a week later. But the stock quickly tailed off and started sinking as concerns grew leading into Apple’s earnings report the following month.
Investors are hoping Tuesday's new iPhones will sustain this year’s rally.

Student Loans Are a Societal Problem, Not an Economic Threat: Economist

Last week JPMorgan (JPM) announced it was exiting the student loan business next month. The bank sees both growth and profit opportunities in the student loan business shrinking as the government continues to take effective control via Sallie Mae. Private banks have been leaving the industry in droves since 2010 when the government cut banks out of the student aid process.
Profitable or not student loan debt has doubled since 2007. There is currently somewhere around $1 trillion of student debt outstanding. According to research conducted by ProgressNow, it takes the average college grad 20 years to pay off their loans after leaving school. Given the size of the market and outsized level of defaults, the free market interest rates would be much higher than the 6.8% currently charged (up from 3.4% in June).
Student debt has become a hot-button issue, but economic strategist John Canally of LPL Financial says the problem is overstated. The personal impact is huge but the systemic risk is minimal. "There's just not as much leverage of the leverage and derivatives tied to the student loan market that was tied to the housing market," he says. "From that perspective having a trillion dollars of student loan debt isn't the worst thing in the world."
There may be minimal systemic risk now but there's little question student debt is a problem for individuals impacted and the job market as a whole. Two-thirds of students leave school with debt. The average monthly payment is $500. According to the BLS the average salary for a teacher is $52,000 per year with starting wages much lower than that. Spending $6,000 a year might not be a problem for college grads able to get high paying jobs, but the prospect of putting more than 10% of your salary towards student loan debt is a harrowing for many.
The first ten years after college are what Canally refers to as "prime time for spending" on new houses, cars and other grown-up possessions. "From an economic perspective we can handle those payments. The question is 'can the economy grow fast enough to get those people back into the labor force after they've left college?'"
If there isn't enough economic demand to sop up the supply of debt-laden college grads it might not lead to a financial catastrophe but the implications for American society are grim.

Big changes on way for Dow industrials

The Dow Jones industrial average is getting a new look, with one of Wall Street's oldest and modest venerable names getting added to the mix.
While the Dow tinkers with its 30 components periodically, often with only modest fanfare, this one will be noticed.
Gone are Alcoa (AA), the company that traditionally kicks off earnings season, along with Bank of America (BAC), which is the second-largest financial institution in the U.S., and Hewlett-Packard (HPQ), which has been in the blue chip index for 16 years.
In their place will be Goldman Sachs (GS), Nike (NKE) and Visa (NYSE:V).
(Read more: Risk on: Investors ignore August declines )
The changes take effect after the close of trading Sept. 20.
The changes will cause alterations to the why the index is weighted.
Visa and Goldman Sachs will have the second- and third-highest respective weightings, according to Bespoke Investment Group.
Also, the divisor Dow Jones uses to calculate the index will change to the point where a $1 move in any stock will move the index 6.5 points, compared with the previous 7.7 points.
Along with being a target for Wall Street critics, Goldman brings heft to the index both in reputation and share value.
Stock price, in fact, is what drove the three-for-three move, the most ambitious change for the index since 2004.
"We have made some big steps in terms of improving the index," David Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices, told CNBC. The Dow is "price-weighted, and very low-priced stocks have very little impact."
(Read more: 'Bad breadth': 11 scary headwinds for investors )
The three stocks leaving had an average price of $15 while the new ones average $134.50.
Timing, though, was at least a little curious.
BofA was the top Dow 30 gainer in 2012, surging 109 percent, and has added another 25 percent in 2013.
The two others to leave the index have fared poorly, though.
Hewlett-Packard, long a rumored target for a Dow exit, tumbled 45 percent last year, though it has jumped 57 percent in 2013.
Alcoa is the Dow's worst performer this year, losing nearly 7 percent.
Goldman is up 25 percent in 2013, while Visa has gained about 18 percent and Nike is up more than 30 percent.

Goldman, Nike, Visa to join Dow; Alcoa, HP, BofA out

A view of the Goldman Sachs stall on the floor of the New York Stock Exchange July 16, 2013. REUTERS/Brendan McDermidReuters - A view of the Goldman Sachs stall on the floor of the New York Stock Exchange July 16, 2013. REUTERS/Brendan McDermid

NEW YORK (Reuters) - Investment bank Goldman Sachs Group Inc. (GS), credit card company Visa Inc. (NYS:V), and footwear Nike Inc. (NKE) will join the blue chip Dow Jones Industrial Average (.DJI), the index managers said Tuesday, replacing Alcoa Inc. (AA), Bank of America Corp. (BAC) and Hewlett-Packard Co. (HPQ).
The changes will be effective with the opening of trading on September 23, S&P Dow Jones Indices said in a statement.
The index changes were prompted by the low stock price of the three companies slated for removal and the index committee's desire to diversify the sector and industry group representation of the index.
The index includes 30 stocks.
(Reporting by Dan Burns; Editing by Chizu Nomiyama)

Futures climb on China data as Syria fears ease

By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stock index futures climbed on Tuesday, putting the S&P 500 on track for a sixth day of gains, following another batch of rosy economic data out of China and as expectations eased about a Western military strike against Syria.
Fears of action against Syria eased after U.S. President Barack Obama said Monday he saw a possible breakthrough in the crisis with Syria after Russia proposed that its ally Damascus hands over its chemical weapons for destruction, which could avert planned U.S. military strikes.
Economic data in China showed stronger-than-expected industrial output and retail sales showed their fastest growth this year, reinforcing signs that China's economy was stabilizing after slowing for more than two years.
"We see again better Chinese economic data - it's a continuation of that story where both industrial output and retail sales continue to add to the improving outlook for the China demand story," said Art Hogan, managing director at Lazard Capital Markets in New York.
"Anything that is going to forestall a strike on Syria certainly gets the risk appetite back into the marketplace."
French Foreign Minister Laurent Fabius said Tuesday the European nation would put forward a U.N. Security Council draft resolution for Syria to give up its chemical weapons, quickly turning the Russian idea into a full-blown diplomatic proposal.
China said it backed the Russian proposal while British Prime Minister David Cameron said the onus was on Russia and Syria to show the chemical weapons handover proposal was genuine.
Oil prices pulled back, with U.S. crude off 1.7 percent. Crude prices rose 2.7 percent last week on worries a strike against Syria could spark a wider conflict and heightened supply concerns.
After suffering its worst monthly performance since May 2012 in August, the S&P 500 (^GSPC) has rallied for the past five sessions for a 2.4 percent gain that marks its longest winning streak in two months.
S&P 500 futures rose 10.4 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 88 points, and Nasdaq 100 futures added 21 points.
McDonald's Corp (MCD) gained 1.1 percent to $97.50 in light premarket trade after the fast-food restaurant chain reported a better-than-expected 1.9 percent increase in global sales at established restaurants in August.
At least three of the top 20 investors in Microsoft Corp (MSFT) are keen for a turnaround expert to succeed Steve Ballmer as chief executive, and have urged the company's board to consider Ford Motor Co (NYS:F) CEO Alan Mulally and Computer Sciences Corp (CSC) CEO Mike Lawrie for the job, several sources familiar with the matter said. Microsoft shares rose 0.91 percent to $31.94 in premarket trading.
Apple Inc (AAPL) is expected to introduce a cheaper version of the iPhone on Tuesday, bringing one of the industry's costliest smartphones within reach of the masses in poorer emerging markets. Apple shares gained 0.6 percent to $509.15 before the opening bell.
About 2,100 positions will be laid off at Bank of America Corp's (BAC) mortgage business, a source told Reuters Monday, in response to weak refinancing activity.
European shares advanced and Asian stocks rose to three-month highs as expectations ebbed of U.S.-led military action against Syria, and following robust macroeconomic data out of China.
(Editing by Bernadette Baum)

Stocks Ignoring Taper Talk…For Now

With a potential military strike on Syria moving to the back of investors' minds, Wall Street is forced to deal with the prospect of the Federal Reserve cutting back on its quantitative easing program later this month. Currently the Fed is buying $85 billion a month in its ongoing effort to keep rates at or near 0%. The Fed has signaled its intention to reduce ("taper") these purchases; the only questions are by how much and what will happen?
Paul Hickey of the Bespoke Investment Group thinks the equity markets are adjusting to the notion of tapering just fine. Despite the recent headline risk from Syria stocks have been reacting well in response to positive news. That marks a change from the "good is bad" thinking of the last few years when the perception was that the Fed was the only thing holding stocks higher.
The bond market is a different story. The yield on 10-year (^TNX) notes have moved from 1.63% at the end of May to just under 3% last week. The Fed may be talking about its commitment to gradual tapering but in the bond world it's all about future prices. While stocks play Hamlet trying to decide whether the bull is to be or not to be, the bond pits have decided the rally is over and it's time to take yields higher.
Part of the bond market's caution stems from the fact that we're in uncharted territory. There's never been anything even close to what the Fed is trying to do in terms of unwinding the massive quantitative easing program. The FOMC may have the best intentions when it comes to gradually easing, but the central bank's actual control of the market is limited. Yields have spiked more than 40% merely on the idea of a reduction in stimulus. There's no telling what kind of world we'll be in once the buying actually stops.
Though the economy has yet to reach the Fed's stated goal of 6.5% unemployment, Hickey says other data supports the notion of higher rates. Pointing to the Institute of Supply Management data released last week Hickey says interest rates have been much higher than they are currently under similar economic conditions.
What's it mean for later this month? Most likely the Fed will taper by an amount designed to appease market participants more than change fundamentals. Look for a $10 to $20 billion reduction in purchases later this month.

Apple’s Cheaper iPhone Is Key To Elusive Chinese Market: Piecyk

Tuesday’s highly anticipated Apple (AAPL) event has been the subject of media speculation since invitations told members of the press that the tech company would “brighten everyone’s day.”
The cryptic message lead many to believe that Apple will be unveiling a new line of colorful iPhones.
Related: What the Yahoo Finance Newsroom Wants From the Next iPhone
Some speculate that the new phones will not just be colorful; they’ll also be cheap. “The low-end phone is key because it opens up a new market,” says Walter Piecyk, wireless analyst at BTIG. “70% of the world’s population uses prepaid service, they get no subsidy and they can’t afford a $600 phone.”
The cheaper phone could appeal to untapped companies in emerging markets like China Mobile. Adding fuel to the speculative fire, Apple is also inviting Chinese journalists to an event in Beijing on Wednesday. Various reports say that top executives from Apple and China Mobile began meeting in July.
Also on the table for today’s event, the high-end iPhone 5S. The phone is said to have fingerprint security capabilities and a brighter and faster operating system.
An Apple TV upgrade might be in the works, but don’t expect any big reveal on that front, says Piecyk.
“The phone business is always going to be the most important thing for Apple going forward. Whether it’s a TV or a watch, these are just add-on products to the central product for Apple which is the phone.”
Apple’s announcement will come hot of the heels of Samsung’s new Galaxy Gear smartwatch.
Both the Samsung Smartwatch and Google Glass have led some to question whether Apple is falling behind when it comes to innovation.
Apple stock is down by nearly 25% year over year.

Outrage as toy company creates 'crystal meth lab' for children with Breaking Bad play sets

  • 500-part set has all the drugs paraphernalia used in hit American series
  • Lego refused to sanction or endorse the toy, which was made by independent company Citizen Brick
  • Twitter users blasted £160 toy as an inappropriate plaything

  • Children can now build their own drug dens with a shocking new play kit inspired by TV show Breaking Bad.
    The sell-out £160 kit, branded 'SuperLab', lets any child or adult recreate Walter White's notorious crystal meth lab.
    Complete with protective masks, drug paraphernalia, figurines and a version of the car from the show, infants can even reenact scenes from the series.
    The toy looks similar to a classic Lego set, although it is not connected to the Danish company in any way and was made by a separate firm.
    'Bricking Bad' allows children - or adults - to construct the industrial meth lab set up by Walter White and drug boss Gustavo Fring
    'Bricking Bad' allows children - or adults - to construct the industrial meth lab set up by Walter White and drug boss Gustavo Fring

    The 500-brick set, made by Citizen Brick in the United States, comes complete with figures of the main characters and enables you to build the entire meth lab
    The 500-brick set, made by Citizen Brick in the United States, comes complete with figures of the main characters and enables you to build the entire meth lab

    The RV used by the characters to rustle up their drugs. Customers are given all the drugs paraphernalia with the kit
    The RV used by the characters to rustle up their drugs. Customers are given all the drugs paraphernalia with the kit

    Outraged commentators took to Twitter to speak out against the bizarre toy.
    Jeff Myers tweeted: 'Made for children raised by parents who should know better.'
    Jacques Gonzales added: 'Definitely not for kiddies!'
    The drama, in its fifth and final series, follows chemistry teacher Walter White on his journey to raise money for his family's future when he is diagnosed with lung cancer.
    The schemer from Albuquerque, played by Bryan Cranston, enlists the help of a former pupil Jesse Pinkman, played by Aaron Paul.
    A global hit, it is hailed by critics and watched by millions around the world.
    Drug boss Gustavo Fring
    Walter White in Breaking Bad
    Drug boss Gustavo Fring (left) and police officer Mike Ehrmantraut (right) have been fashioned into figurines

    The £160 kit has already sold out online. The American show has a wealth of underage viewers worldwide
    The £160 kit has already sold out online. The American show has a wealth of underage viewers worldwide

    But Lego Group refused to sanction the merchandise, produced by Citizen Brick, because of its 'adult content'.
    Beneath the sold-out item, the Citizen Brick website told customers: 'Soothe yourself with the Citizen Brick Superlab Playset.
    'Who knows what fun you’ll cook up with this deluxe set, chock full of realistic details, and three exclusive minifigs! Over 500 parts!
    Lego refused to sanction the play set because of the 'adult content' available to people of any age
    Lego refused to sanction the play set because of the 'adult content' available to people of any age

    'This set is a product of Citizen Brick, and is not sponsored, authorized or endorsed by the LEGO Group, owners of the registered LEGO(R) trademark.'
    Interest in the series is rife among under-age viewers, with one pair of children screening their own version on YouTube last month.
    Rather than Class As, the Breaking Bad Jr stars deal in Jelly Beans, and the star suffers from diabetes instead of cancer.

    Left with nothing.

    On the day Bennie Coleman lost his house, the day armed U.S. marshals came to his door and ordered him off the property, he slumped in a folding chair across the street and watched the vestiges of his 76 years hauled to the curb.
    Movers carted out his easy chair, his clothes, his television. Next came the things that were closest to his heart: his Marine Corps medals and photographs of his dead wife, Martha. The duplex in Northeast Washington that Coleman bought with cash two decades earlier was emptied and shuttered. By sundown, he had nowhere to go.
    All because he didn’t pay a $134 property tax bill.
    The retired Marine sergeant lost his house on that summer day two years ago through a tax lien sale — an obscure program run by D.C. government that enlists private investors to help the city recover unpaid taxes.
    For decades, the District placed liens on properties when homeowners failed to pay their bills, then sold those liens at public auctions to mom-and-pop investors who drew a profit by charging owners interest on top of the tax debt until the money was repaid.
    But under the watch of local leaders, the program has morphed into a predatory system of debt collection for well-financed, out-of-town companies that turned $500 delinquencies into $5,000 debts — then foreclosed on homes when families couldn’t pay, a Washington Post investigation found.
    As the housing market soared, the investors scooped up liens in every corner of the city, then started charging homeowners thousands in legal fees and other costs that far exceeded their original tax bills, with rates for attorneys reaching $450 an hour.
    Families have been forced to borrow or strike payment plans to save their homes.
    Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations.
    Investors also took storefronts, parking lots and vacant land — about 500 properties in all, or an average of one a week. In dozens of cases, the liens were less than $500.
    Coleman, struggling with dementia, was among those who lost a home. His debt had snowballed to $4,999 — 37 times the original tax bill. Not only did he lose his $197,000 house, but he also was stripped of the equity because tax lien purchasers are entitled to everything, trumping even mortgage companies.
    “This is destroying lives,” said Christopher Leinberger, a distinguished scholar and research professor of urban real estate at George Washington University.
    Officials at the D.C. Office of Tax and Revenue said that without tax sales, property owners wouldn’t feel compelled to pay their bills.
    “The tax sale is the last resort. It’s also the first resort — it’s the only way in the statute to collect debt,” said deputy chief financial officer Stephen Cordi.
    But the District, a hotbed for the tax lien industry, has done little to shield its most vulnerable homeowners from unscrupulous operators.
    Foreclosures have upended families in some of the city’s most distressed neighborhoods. Houses were taken from a housekeeper, a department store clerk, a seamstress and even the estates of dead people. The hardest hit: elderly homeowners, who were often sick or dying when tax lien purchasers seized their houses.
    One 65-year-old flower shop owner lost his Northwest Washington home of 40 years after a company from Florida paid his back taxes — $1,025 — and then took the house through foreclosure while he was in hospice, dying of cancer. A 95-year-old church choir leader lost her family home to a Maryland investor over a tax debt of $44.79 while she was struggling with Alzheimer’s in a nursing home.
    Other cities and states took steps to curb abuses, such as capping the fees, safeguarding houses owned by the elderly or scrapping tax sales altogether and instead collecting the money themselves.
    “Where is the justice? They’re taking people’s lives,” said Beverly Smalls, whose elderly aunt lost her home in Northeast Washington. “It’s just not right.”
    In a 10-month investigation, The Post chronicled years of breakdowns and abuses in a program that puts at risk one of the most fundamental possessions in American life.
    • Of the nearly 200 homeowners who lost their properties in recent years, one in three had liens of less than $1,000.
    • More than half of the foreclosures were in the city’s two poorest wards, 7 and 8, where dozens of owners were forced to leave their homes just months before purchasers sold them. One foreclosed on a brick house near the Maryland border with a $287 lien and sold it less than eight weeks later for $129,000.
    • More than 40 houses were taken by companies whose representatives were caught breaking laws in other states to win liens.
    • Instead of stepping in, the D.C. tax office created more problems by selling nearly 1,900 liens by mistake in the past six years — even after owners paid their taxes — forcing unsuspecting families into legal battles that have lasted for years. One 64-year-old woman spent two years fighting to save her home in Northwest after the tax office erroneously charged her $8.61 in interest.
    Every Wednesday, homeowners plead their cases at D.C. Superior Court, where they are pitted against industry lawyers who have filed for more than 7,000 foreclosure cases in the past eight years alone. Families pace the hallways waiting for their names to be called in last-ditch efforts to rescue their homes.
    “This is highway robbery,” said Brenda Adjetey, who showed up in court last week to protect her home in Southeast Washington after her $1,100 tax bill nearly quadrupled because of legal fees charged by the investor.
    Tax lien purchasers defend the industry, saying that most people who buy liens are local investors just trying to earn interest — not take homes — and that the law gives owners six months to repay their debts before a foreclosure case can be filed.
    “This is an opportunity to make some money, but it is also an opportunity for the city to get paid and to help its citizens,” said Richard Cockerill, a veteran bidder from Virginia.
    In a written statement, the tax office added, “Property owners are given multiple opportunities to pay both before and after the tax sale.”
    Officials also said the tax office has made improvements to the program in recent years, including additional warnings to homeowners before liens are sold, and the office recently stopped selling liens on houses for less than $1,000.
    But officials acknowledge that limit was set to manage the caseload and is not a permanent policy change.
    At a public hearing this past October, housing advocates presented a list of reforms to the D.C. Council, including capping the fees charged by purchasers and offering payment plans to struggling homeowners. But the changes were never made.
    “That’s a failure on the part of government,” said Stephen Fuller, director of the Center for Regional Analysis at George Mason University. “This has punitive consequences. People have been damaged.”

    If Employment Is So Great, Why Are Withholding Taxes Declining?

    by Charles Hugh-Smith
    It’s difficult to have a meaningful national debate about economic policy when “headline numbers” are juiced to make things appear rosier than reality.
    Since unemployment statistics are either suspect or blatantly bogus, we must look for other less manipulated statistics for some modicum of truth. Key statistics of employment, income and production are vital propaganda tools for the status quo, and the temptation to adjust them to manage perceptions is apparently irresistible.
    Here in the U.S., unemployment statistics are a travesty of a mockery of a sham:
    Real Unemployment Rate Rises To 11.4%, Difference Between Reported And Real Data Rises To Record (Zero Hedge)
    Guggenheim On The US Jobs Growth “Mirage”
    In China, output is routinely juiced to fantasy levels:
    Chinese Province ‘Busted’ For Fake Data; Exaggerated 2013 Output By Over 150% (Zero Hedge)
    To get some semi-accurate sense of China’s actual output, as opposed to official propaganda, skeptics look to electricity consumption as an imperfect but better-than-lies gauge of actual economic activity.
    Here in the U.S., longtime correspondent B.C. suggests we look at withholding taxes as a more accurate measure of employment than the ginned-up official numbers.Withholding taxes are payroll taxes, and as such they are a direct measure of payrolls and earned income. (Self-employed people who don’t issue themselves monthly or weekly paychecks pay their withholding taxes quarterly.)
    In other words, withholding taxes (i.e. Social Security, Medicare and estimated income taxes) are a very broad and accurate measure of the earned income of both employees and self-employed.
    Since many high-earning professionals such as attorneys and accountants are self-employed, the earnings reported by the self-employed are significant. The self-employed have some control over when and how they report earnings, and many chose to report income in late 2012 rather than in 2013 to avoid the tax increases that kicked in on January 1, 2013.
    This accounts for the spike in wages and withholding taxes in late 2012.
    Here is a chart of wages/salaries and withholding receipts:
    Wages/salaries have trended up since early, but growth has flattened recently. Withholding taxes are declining.

    Here are employment and withholding receipts. Civilian employment has increased by some 2.5 million jobs since January 2012, but withholding receipts are actually lower than January 2012. This strongly supports what many others have already observed: the substitution of lower-wage part-time jobs for full-time employment. It’s difficult to conjure up any other explanation for employment rising and payroll taxes declining. Massive cuts in wages would have the same consequence, but there is no evidence of widespread reductions in hourly wages.

    Here are employment and wages/salaries. We see the same basic dynamic here: the number of jobs continues increasing but wages/salaries are trending flat to down.

    The con being played here is the assumption that more jobs means more wages which means things are getting better and better in every way, every day. If payroll withholding taxes are declining, and wages/salaries are flatlined, things are not getting better and better in terms of earned income flowing into household bank accounts, purses and wallets.
    About 20 million working-age adults have supposedly dropped out of the U.S. labor force (and therefore become zombies who are not counted in tallies of unemployment) since January 2001. This is roughly comparable to the entire workforce of Italy (22.8 million) or South Korea (25 million).
    If we drop another 15 million unemployed from the labor force, the unemployment rate will fall to near-zero. “Unemployment rate drops to 1%” will make a warm and fuzzy headline, but it won’t mean there are more jobs or higher earned incomes. An official account of the economy based on 20+ million unemployed people not counted as unemployed is a shameful lie.
    Record 90.5 Million Out Of Labor Force As Half A Million Drop Out In One Month (Zero Hedge)
    It’s difficult to have a meaningful national debate about economic policy when perceptions and “headline numbers” are juiced to make things appear rosier than reality.
    My new book The Nearly Free University and The Emerging Economy (Kindle eBook)is available at a 20% discount ($7.95, list $9.95) this week. Read the Forword, first section and the Table of Contents.

    Global Currency Reset In Process: U.S. Ship of State is Sinking, The Rest of The World Is Walking Away From U.S. Treasuries & Dollar, And Wants To Use A New Currency To Escape The Coming Global Inflation

    http://usawatchdog.com/u-s-ship-of-st… According to Dr. Jim Willie, the rest of the world is tired of the money printing by the Fed and wants to use a new currency to escape the coming global inflation of a dollar that can quickly lose its buying power. Dr. Willie says, “This is financial survival. Nations need to depart from the dollar, and the first ones that do will be the survivors, and laqst ones will enter the third world.” As far as Syria, Dr. Willie says it’s not about chemical weapons, but about pipelines and our adversaries gaining economic advantage. Dr. Willie claims, “The U.S. is obstructing capitalism and commerce. That is the problem.” Join Greg Hunter as he goes One-on-One with Jim Willie, Publisher of The Hat Trick Letter, which can be found on

    Russia to Brazil Intervention Adds to U.S. Debt Distress
    Investors suffering the worst losses in Treasuries since at least 1978 can add dollar sales by emerging-market central banks to their list of challenges.
    Speculation that the Federal Reserve, the biggest buyer of Treasuries, will reduce its purchases sent U.S. debt down 4.1 percent this year and boosted the dollar against developing-nationcurrencies for four straight months, matching the longest streak since 2001, according to Bloomberg data. India, Brazil, Russia and Indonesia have intervened in foreign-exchange markets, and dollar sales mean liquidating Treasuries, according to bond traders at Scotiabank and Bank of America Corp.
    While the $48 billion drop in foreign central bank holdings at the Fed since a record in June is less than half of the $113 billion in withdrawals from U.S. bond funds in the past three months, they mark a change in trend. Foreign ownership of Treasuries fell 0.6 percent in the first half of 2013, poised for the first full-year decline in data going back to 2000 and a departure from the 10 percent annual gains seen since 2006.
    “There is a lack of buyers in the Treasury market,” Ali Jalai, a Singapore-based trader at Scotiabank, a unit of Canada’s Bank of Nova Scotia, said in a telephone interview Sept. 4. “Selling by central banks to back up their currencies exacerbates the situation.”

    “The buyers of American Treasuries are going to be American private-sector investors going forward to a greater degree,” Kit Juckes, global strategist at Societe Generale SA, whose U.S. unit is a primary dealer, told Bloomberg Television on Sept. 2. “Tapering is an exercise now in price discovery. What is the clearing price for U.S. government securities when the biggest buyers are walking away?”
    Who Is Going To Buy Our Debt If This War Causes China, Russia And The Rest Of The World To Turn On Us?
    Can the U.S. really afford to greatly anger the rest of the world when they are the ones that are paying our bills?  What is going to happen if China, Russia and many other large nations stop buying our debt and start rapidly dumping U.S. debt that they already own?  If the United States is not very careful, it is going to pay a tremendous economic price for taking military action in Syria.  At this point, survey after survey has shown that the American people are overwhelmingly against an attack on Syria, people around the globe are overwhelmingly against an attack on Syria, and it looks like the U.S. Congress is even going to reject it.  But Barack Obama is not backing down.  In fact, ABC News is reporting that plans are now being made for a “significantly larger” strike on Syria than most experts had expected.
    If Obama insists on going forward with this, it will be the greatest foreign policy disaster in modern American history.

    According to the U.S. Treasury, foreigners now hold approximately 5.6 trillion dollars of our debt.  Over the past couple of decades, the proportion of our debt owned by foreigners has grown tremendously, and today we very heavily depend on nations such as China to buy our debt.

    At this point, China owns approximately 1.275 trillion dollars of our debt, and Russia owns approximately 138 billion dollars of our debt.
    So what would happen if China, Russia and other foreign buyers of our debt all of a sudden quit purchasing our debt and instead started dumping the debt that they already own back on to the market?
    In a word, it would be disastrous.
    As I have written about previously, the U.S. government will borrow about 4 trillion dollars this year.

    As The Fantasy Dies, Panic Will Ensue & Gold Will Soar
    Today Bill Fleckenstein warned King World News that “as the fantasy dies,” panic will ensue and gold will soar.  Fleckenstein also predicted that the staggering 24% unemployment in the United States will get much worse in the future as people realize the Fed is trapped and the great unwind finally begins.  Below is what Fleckenstein, who is President of Fleckenstein Capital, had to say in this powerful interview.
    David Stockman: ‘Fiscal Crisis Coming Down Road’
    The U.S. economy remains weak, and the government is headed for a fiscal meltdown, says former White House budget director David Stockman.
    The economy grew 2.5 percent in the second quarter.
    But, “when I look at trends, I don’t see any kind of [economic] recovery that’s sustainable. Industrial production is barely where it was in the fall of 2007, full-time jobs are still down 8 percent and median family income is down 8 percent,” he told CNBC and Yahoo’s Talking Numbers.
    Global Currency Reset In Process: Russia & China Are Fed Up With The Dollar System & Dollar Hegemony, BRICS May Agree On $100 Billion Currency Fund, The Bankers of The World Are Fixing To Throw Away The U.S. Dollar As The Global Reserve Currency - August 30th, 2013
    Read more at http://investmentwatchblog.com/global-currency-reset-in-process-russia-china-are-fed-up-with-the-dollar-system-dollar-hegemony-brics-may-agree-on-100-billion-currency-fund-the-bankers-of-the-world-are-fixing-to-throw-away-t/#q8zsgzWlFBSAZY46.99
    Global Currency Reset In Process: The Fed Can’t Exit Easy Monetary Policy As USD Comes Under Attack, China and Russia Suggesting A New Bretton Woods, One Quadrillion Dollars of Derivatives Time Bomb Is Set To Explode - August 9th, 2013
    Read more at http://investmentwatchblog.com/global-currency-reset-in-process-the-fed-cant-exit-easy-monetary-policy-as-usd-comes-under-attack-china-and-russia-suggesting-a-new-bretton-woods-one-quadrillion-dollars-of-derivatives-time-bomb/#jfjlL9yoYihZtGfW.99

    China and Russia hold 1.440 Trillion Dollars in U.S. Debt, between them they account for over 25% of foreign holders of Treasuries…
    The question isn’t who is going to buy when the Taper begins on the 15th of Sept, the question is, who is going to start the Selling Frenzy that buries us…
    What people don’t understand is that all the Chinese and Russian’s have to do is begin selling Treasuries, driving the yield up, and this will cause Japan and many under capitalized banks around the world to begin selling for liquidity, that’s when the run on the dollar begins…
    Once that begins in earnest, the game is over, the gig is up…
    For people who don’t believe that last Thursday’s jump in the 10 yr Treasury Yield to over 3.01% was shot across our bow, then you just aren’t paying attention…
    You want Doom out of this war, this is your doom!!!
    Because within a month of a massive strike on Syria, the U.S. Dollar will be toast…


    IBM Blame Obamacare – Cutting Healthcare – IBM To Drop 110,000 Retirees From Health Care

    IBM Blame Obamacare – Cutting Healthcare – IBM To Drop 110,000 Retirees From Health Care

    The real state of the world economy is dire

    We are now back to the “green shoots” era of false hope and total misunderstanding of the real state of the world economy. There are minor tidbits of good news that combined with manipulated and seasonally adjusted economic figures are giving politicians worldwide reason for spreading their optimistic gospel of recovery that has nothing to do with reality.
    A world based on debt
    How can a world with $250 trillion of debt and over $1 quadrillion of worthless derivatives ever recover? Of course it can’t, especially since this is a world that is supported by legs of worthless printed paper money – legs that are just getting longer and more unstable by the day as trillions are added to the debt every year.
    Wherever we turn Europe, USA, Japan and many other nations, the situation is totally beyond repair. But as I have said in recent interviews and articles, it is not just beyond repair but we are likely to be at the end of a major economic cycle that started at the end of the Dark Ages. I wrote about this already back in 2009 in my article The Dark Years Are Here” . Major economic cycles take a long time to develop and if we are now at the beginning of a major downturn in the world economy, people living today will only experience the very beginning of the downturn. But sadly the beginning will be a major and very unpleasant upheaval that virtually nobody will escape.
    We have had a century of false prosperity based on printed money and credit. In the last 100 years we have seen the creation of the Fed in the US (a central bank owned, created and controlled by private bankers) combined with fractional reserve banking (allowing banks to leverage 10 to 50 times), exploding government debt and a derivatives market of $1.4+ quadrillion. These are the principal reasons why the world economy has expanded in the last century and particularly in the last 40 years. These four extremely shaky legs, Central bank printing, Bank leverage, Government borrowing and Derivatives manufacturing have created a world of delusional wealth and illusory prosperity. Also, there is a total absence of moral and ethical values. We are in the final stages of an era of extreme decadence, an era that sadly cannot and will not have a happy ending.
    Europe a hopeless case
    But still, governments and the media are continuing to feed us with good news which bears no resemblance to the real state of the world economy. In Europe the Mediterranean countries are expanding their debt at exponential rates. Government debt to GDP of Spain, Portugal, Italy and Greece is ranging from 100% to 180%. There are futile attempt at austerity but this only leads to lower growth and higher debts. There is sadly no way out for these countries whose population is suffering terribly. The best solution would be to leave the EU and the Euro, renege on the debts and devalue currencies. But the Eurocrats are unlikely to accept this and would rather add more debt and print more money, making the situation even worse.
    US debt will sink the world
    The situation in the US is no better. There is hardly one economic figure being published that has anything to do with reality. Real unemployment is 23% and not 7% as published. GDP using real inflation figures has been declining for years, and real wages have declined for 40 years. The perceived increase in living standards has only been achieved with a massive increase in debt. US government debt was $1 trillion in 1980, $8 trillion in 2006 when Bernanke became Chairman of the Fed and is now $17 trillion and growing by at least one trillion a year. So Bernanke has managed to create $9 trillion of debt during his brief 7 years as Chairman of the Fed. It took 230 years from 1776 to 2006 for the US to reach $8 trillion and Bernanke has beaten that in 7 years. An astonishing achievement.  And this debt excludes unfunded government liabilities of around $220 trillion. Who in their right mind can believe that the US can get out of this hole!
    Yes the US and the rest of the world will print unlimited amounts of money. But printed money is printed worthless pieces of paper and has nothing to do with wealth creation. The worldwide printing will just add to the already unsustainable debt worldwide and not create one penny of added prosperity. Instead we are likely to see a hyperinflationary depression in many countries.
    For the privileged few that have financial assets to protect, physical gold stored outside the banking system is likely to be the best way to preserve wealth and purchasing power.
    Egon von Greyerz

    Attack on Syria to trigger fuel Apocalypse

    Attack on Syria to trigger fuel Apocalypse. 51042.jpeg
    In an anticipation of the war in Syria, the global oil market starts to shiver. A barrel of oil has recently jumped up to $115, which, according to experts, is not a limit. Some analysts give quite gloomy forecasts. They authoritatively declare that the world is standing on the verge of gasoline apocalypse.
    In the Russian part of the Internet, there is a very popular forecast from U.S. expert Brandon Smith, who considers Syria a spring board for apocalypse that has been planned by the US establishment. His list of 20 looming, pretty grim events, includes those associated with the cost of oil.
    According to Smith, in response to U.S. actions against Syria, Iran can close the Strait of Hormuz by sinking several cargo ships at its narrowest point. Such an act would immediately cut the volume of oil transportation by 20 percent. At the same time, the Egyptian Suez Canal will become highly dangerous to navigation too. Oil tankers will thus have to go around the Horn of Africa, increasing the length of the route by two weeks and significantly raising the cost of transportation.
    The inevitable export of instability, the experts believes, will trigger a social conflict in Saudi Arabia. As a result, prices on gasoline will increase significantly. Smith predicts a rise in 75-100 percent during two or three months after any type of attack on Syria.
    Sounds scary. Brandon Smith is a professional survivalist. His business is to organize local communities to create a network of mutual aid and barter across the United States. Looks very apocalyptic already. Yet, Smith gives his predictions quite accurately.
    Less exalted experts agree with Smith's arguments, at least partially. Indeed, Syria does not affect the oil market directly. The peak of oil production in the country was registered about 15 years ago. Since 2011, the export of hydrocarbons has been virtually stopped - the country consumes all it makes. To crown it all, Syria is dangerously close to major oil transportation routes.
    The risk for oil transportation routes explains surging oil prices on stock exchanges. Investkafe analyst Gregory Brig predicts further growth of quotations of up to 120-125 dollars per barrel. Some economists believe that the price will reach $150. However, such a rise prices is only possible if the Syrian conflict escalates into a more substantial one, with the participation of other countries in the Middle East, and if the Strait of Hormuz is eventually blocked.
    "Syria is not a key player on the oil market. Rather, the market fears destabilization of the geopolitical situation in the Middle East. If Syria accounts for about 2/10 of the world's oil production, the Middle East accounts for 30 percent. Many are concerned that other countries will be involved in the conflict - Iran, Egypt and others. Therefore, prices will rise," said the analyst.
    Against the background of the current situation, a rise by 75-100 percent is out of the question, of course. First and foremost, such rapid growth will kill all possible production everywhere - the world economy will not survive. Even the current growth in prices creates serious problems. The majority of experts, recalling 2008, are confident that after a short way up, the oil market will face a serious pullback. Before the crisis of 2008, a barrel of oils cost $147.3, but by the end of the year the price dropped to $35.
    Nowadays, experts say, prices will most likely return to the level of one hundred dollars. Despite the version of giant oil reserves found in Syria (about 37 billion tons), which could derail the prices, it most likely goes about shale oil deposits on the shelf. In addition, the Syrian oil is classified as heavy hydrocarbons (like the Russian Urals). Who would want to arrange a small victorious war to get such dubious benefits? The game is not worth the candle, because these huge reserves would have little effect on reducing the cost of oil.
    Anyway, as history shows, the actions of the United States in oil-rich regions only lead to complications. This was the case in Libya, where the richest deposit on the African continent is located. A member of Libya's Parliamentary Committee on Energy, Sliman Kajam said that the official production of black gold dropped to 150,000 barrels a day. Prior to the "democratization" of Libya, the daily production was evaluated at 1.5 - 1.7 million barrels a day.
    In addition, the level of oil production in such countries as Saudi Arabia and Iraq are getting closer to their peak. In general, the current level of hydrocarbon prices adequately reflects the balance of supplies and production.
    Higher oil prices will certainly bring more profit to Russia, but this money will be soaked in the blood of many Syrian citizens. According to many experts, the aggravation of the situation in Syria will make investors move their capitals from emerging markets to developed ones. The losses from the fall of the Russian stock market will outweigh benefits of the rising cost of oil.
    Meanwhile, the head of the Duma Committee on Economic Policy, Igor Rudensky, told Pravda.Ru that the situation in Syria would hopefully be resolved peacefully. "Even if something happens, I do not think it will affect the global world oil market. Oil prices having been going up and down during the last five or six years. International events have their influence on the oil market, of course. If the European economy starts growing, for instance, the demand starts growing too, and oil prices rise. If the demand is falling, prices are falling too. Today, any talks about dramatic changes in oil prices are premature. Overall, the situation is quite stable. Now you can see what happens. Everyone says at the G20 summit that the world economy is slowing down, so one needs to look for a way out from the global crisis together. In my opinion, in the next few years, nothing extraordinary will happen."
    Ilya Nikonov

    Four Economic Records… None of Them Good

    by Phoenix Capital Research

    The US economy continues to be a disaster.
    Last week’s jobs report was just plain awful. The media is trumpeting the fact that the unemployment percentage fell, but they forgot to mention that this is because over 500,000 people left the labor force.
    Indeed, the actual number of folks who left the labor force (516,000) was a RECORD. And the number of people not in the labor force is another record at 90.47 million.
    This is not because these people found jobs, nor is it because the economy is improving. It’s because the Feds don’t count you as “unemployed” if you stop looking for work.
    On top of this, the labor participation rate (total number of those employed divided by those of working age) fell to 63.2%. This is the lowest level since the late ‘70s. As a segment, men have an employment ratio of 69.5%. This is the single lowest reading in the history of this metric (going back to 1948).
    So that’s three economic records. None of them good.
    Add to this the new record of people on food stamps and you have an economic disaster.
    This is an economic disaster. It shows us point blank that the economy has not recovered and that all talk of recovery is based on either phony data or outright fraud.
    The fact of the matter is that we are on the cusp of a market correction if not something more.

    For more market insights and commentary, visit us at:
    Best Regards
    Graham Summers

    War With Syria Is Imminent And It’s All About Saving The Bankrupt Fiat Money System. Get Ready For Syrian False Flag On USA!

    http://FinancialSurvivalNetwork.com presents
    War with Syria is imminent. It’s all about saving the bankrupt fiat money system. Andy knew it was coming. He never doubted it for a moment. Every currency in the world is plunging against the dollar. Inflation is being successfully exported. There’s all sorts of bad news on the horizon. Interest rates are headed higher and higher. But gold and silver are also climbing. Listen carefully to the intereview. It’s an important one. Major events around the world are about to kick into high gear.
    REALIST NEWS – Get Ready For Syrian False Flag On USA